Day trading is a potential area for earning a decent amount of money within a short period of time, but it is harder than using other trading systems. Professional Singaporean traders always follow money management techniques to reduce losses.
Effective money management tricks
In this post, we will briefly demonstrate the most effective money management tricks.
1. Wire your money out
It is true that there is a thrill related to your trading account, which is – if you gradually become a more consistent retailer, you can see profits regularly. It is a satisfactory issue to watch the trading account growing day by day.
It is normal that after making a large profit consecutively, you may want to invest more money to earn more. It is tempting to trade and repeat again. You can do this for sure, but there is a problem. Let us make that clear to you. For example, when you win $10,000, don’t invest all of it in your next trade. Instead of doing this, you should withdraw approximately $6,000 to $7,000 from your account.
Newbies always ask why they should do this. This process will protect your profit from any accidental losses. You may invest your $10,000 in the next trade, but what is going to happen next? Can you guarantee that you can easily make it? Nobody can. If you can successfully wire out some of the money from the trading account, you can save them. In addition to this, you are reducing the risk of losing money.
2. A maximum $ Stop-loss
Professionals always have the maximum stop-loss dollar, which is an effective way to protect your trading account. This set up will instantly send you a message when the trade starts moving in the wrong way and when you need to close the trade. It is hard to mention the exact number because the number will vary based on the trader’s size. Try to use the advanced trade management tools at saxotrader to find the precise stop loss.
A retail trader can set the stop loss at $1,000, while another may set the limit at $200. So, it is not feasible to mention the exact amount. It is one of the most important money management tricks because if you set the stop-loss at $200, you will never lose more than that.
Another most important thing about this trick is that while setting up a stop-loss limit, try to choose a number that perfectly fits you. Setting up a stop-loss means that you don’t need to wait to exit the trade. You can also exit the trade even before the losses hit the limit.
3. Trade based on your tolerance limit
No FX traders should trade with his investment without thinking about the negative consequences. If you think that you can withstand the market crash and the loss of your money, you can enter a trade. For example, you have $1,000 in your trading account. If you think that you can withstand the loss of $1,000, don’t trade with all the money. Instead, it is a wise decision to trade with either $500 or $200.
Experienced traders always recommend the newbies to save up to 2 years’ job salary to grab the market. This money will ensure that you can live your life securely and comfortably. If you can trade based on your tolerance level, you will surely make intelligent decisions to succeed. Never try to make money quickly from the stock market.
4. Cut off extra expenses
Many people prefer a luxurious life to live in. If you are interested in setting up a trading career, we will suggest you cut off the extra and unnecessary expenses. Successful Forex retailers can indeed live an exotic and adventurous life, but they have not made that money within a night.
So, when you start the trading career, try to cut off all the unnecessary expenses as they will waste your money. Concentrate on trading and try to develop your skills for trading purposes. Your knowledge, experience, and skills will help you to build a successful trading career.
These are the most effective money management tricks you can follow to succeed.